Trading-Mentality

Can artificial intelligence (AI) tools change the way you do market research or trade? I think so, if done right.  First off, ignore the clickbaity YouTube videos that use ChatGPT to generate trading strategies for you to back/forward test. Maybe you’ll get somewhere, maybe you won’t. However, I do think conducting market research and staying on top of high-impact events has gotten easier. This is something I’m beginning to experiment with through Perplexity.ai and their “Labs” feature.

You know market participants are tired of Trump’s tariffs when this phenomenon is dubbed the “TACO trade.” Trump Always Chickens Out, or TACO, perfectly describes the fatigue with the constant imposition and pullback of new tariffs at seemingly arbitrary percentages. Is this some kind of 1,000 IQ market manipulation play or pure idiocy? Nobody knows. What is known, and observable, is that the US dollar index has not been trending positively. On an aggregate level, this indicates a gradual and systemic reduction in USD holdings.

 It’s been another “dead” week in the FX market. While I did take several trades, none of them made significant moves. I mostly closed them out around break-even, incurring a minor loss. Mentally, it’s been challenging. When market volatility doesn’t align with my strategy, self-doubt and the urge to re-strategize creep in. Changing a strategy based on a few unsuccessful trades is a risky move. I constantly remind myself to focus on large numbers. If my strategy fails, it will be evident in my trade log after 50 or 100 trades. That being said, I won’t be doing a trade recap this week. Nearing the end of this week, my alerts went off, indicating that price broke key level on several pairs. I’ll focus on the pairs-in-play for the upcoming week instead.

It’s no surprise that another week has passed and the word “tariff” has failed to escape the news. Perhaps the main update is that the US and China announced, on May 12th, a 90-day suspension and reduction of the “retaliatory” tariffs that reached 145% at one point. If you’re having trouble keeping up with the tariff news, you’re not the only one.

My last update post was for the week ending March 14th, 2025. Don’t worry, I haven’t stopped this series of end-of-week updates.  Leading up to April, I was in preparation mode for back-to-back travels in early April. This was unfortunate because the first half of April saw quite a bit of volatility. When I came back from my travels in mid-April, volatility diminished, and I definitely felt a hit with the lack of entry signals. That being said, I took this time to revisit my trading log in Excel and FTMO account. All the updates will be shared in this post.

The past week has been interesting. Trump has ordered the US military to plan an invasion to seize the Panama Canal . Why? Excessive tolls on US ships, of course. Reuters provides a great explainer on the history of the Panama Canal and Trump's demands . In addition, some speculate Trump's escalating trade war (and maybe real war) threats is leading to a positive sentiment of Chinese markets . In the short run, this may lead to unpredictable volatility, especially in the western markets. On the other hand, volatility died down in the FX market last week, which I was slow to adapt. In terms of my trading performance, I returned some profits back to the market as I took on bigger positions that didn't end up winning.

The past week can be summed up with two words - tariff whiplash. The rest of the world is dealing with a "leader" who is spending more time acting like a bully on the playground.  Instead of using big boy words and clearly communicating what he wants, Trump has more commitment issues than modern dating situationships. What is he hoping to get out of these tariffs? Nobody knows. There has been a recent shift in market sentiment. This was observable through both the equity and currency markets.